Minority stake sale planned for Habeco

The government is preparing to sell more shares in the country’s third-largest brewer, the Hanoi Beer Alcohol and Beverage Joint Stock Corp. (Habeco), but is unwilling to give up its majority holding just yet.

Deputy Minister of Industry and Trade Cao Quoc Hung said it is planning to sell less than 5 per cent of its share in the company. It is currently negotiating the sale with Carlsberg, a strategic partner that currently holds a 17.5 per cent stake.

The Danish brewer has been discussing its priority purchasing rights with the Vietnamese Government for years. The government and Carlsberg have held several rounds of talks on the sale, and the largest hurdle to a final deal is not the volume of shares but the price.

Carlsberg, which became a strategic shareholder in Habeco in 2008, holds priority purchase rights for a 60 per cent stake and wants to increase its stake to 61.79 per cent from 17.51 per cent, Mr. Tayfun Uner, former CEO of Carlsberg Vietnam, said in late 2016.

In the latest move, however, Deputy Prime Minister Vuong Dinh Hue said that Carlsberg supports the idea of the government retaining 36 per cent of Habeco, to secure veto power and protect Vietnamese brands. The price and date for the upcoming sale have not been announced.

Habeco’s revenue in 2017 fell 2 per cent from the previous year, to VND9.8 trillion ($431 million), and profit was down 2 per cent to VND754 billion ($33.16 million), according to the company’s financial reports.

Its shares have risen 57 per cent over the last six months, exceeding the 38 per cent gain in the VN-Index. The brewer trades at 41 times estimated earnings for the next 12 months, compared to 33 times for Sabeco, and is about twice the valuations of Carlsberg and other global brands such as Kirin Holdings Co. and Heineken NV.

The government last December sold a 53.6 per cent stake in the Saigon Beer Alcohol Beverage Corp. (Sabeco), the country’s largest brewer, to Thai Beverage for $4.84 billion at auction. The shares changed hands at VND320,000 ($14) each, nearly 10 per cent higher than the market price.

“The initial price of these shares is based on prices in the 20 most-recent trading sessions,” Deputy Prime Minister Hue said. “These companies are not allowed to sell below the floor price the government has set.”

Vietnam is sending a message to investors that it will bargain hard to get the highest price for government assets, especially those considered to be “crown jewels” - Sabeco last December and now Habeco - according to Mr. Marc Djandji, Head of Institutional Sales at Viet Dragon Securities in Ho Chi Minh City.